HCS CSSB 177(FIN): "An Act relating to insurance trade practices; and providing for an effective date."

00HOUSE CS FOR CS FOR SENATE BILL NO. 177(FIN) 01 "An Act relating to insurance trade practices; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 05 section to read: 06 SHORT TITLE. This Act may be known as the Alaska Insurance Consumers 07 Protection Act. 08 * Sec. 2. AS 21.36.010 is amended to read: 09  Sec. 21.36.010. Purpose. The purpose of this chapter is to regulate an act or 10 a trade practice [PRACTICES] in the business of insurance in accordance with the 11 intent of Congress as expressed in 15 U.S.C. 1011 - 1015 (McCarran-Ferguson Act) 12 [THE ACT OF CONGRESS OF MARCH 9, 1945 (P.L. 79-15; CH. 20, 59 STAT. 13 33),] by defining or providing for determination of all the practices in this state that 14 constitute an unfair method [METHODS] of competition or an unfair or deceptive act

01 or practice [ACTS OR PRACTICES] and by prohibiting them. 02 * Sec. 3. AS 21.36.020 is amended to read: 03  Sec. 21.36.020. Unfair methods, deceptive acts prohibited. A person may 04 not engage in an act or a trade practice in this state or relative to a subject resident, 05 located, or to be performed in this state that is defined in this chapter as, or determined 06 under this chapter to be, an unfair method of competition or an unfair or deceptive act 07 or practice in the business of insurance. 08 * Sec. 4. AS 21.36.070(b) is amended to read: 09  (b) A person providing the director with information concerning the financial 10 condition or an act or a practice [PRACTICES] of a licensee of the division is 11 immune from liability for defamation. 12 * Sec. 5. AS 21.36.125 is amended to read: 13  Sec. 21.36.125. Unfair claim settlement practices. A person may not commit 14 [OR ENGAGE IN WITH SUCH FREQUENCY AS TO INDICATE A PRACTICE] 15 any of the following acts or practices: 16  (1) misrepresent facts or policy provisions relating to coverage of an 17 insurance policy; 18  (2) fail to acknowledge and act promptly upon communications 19 regarding a claim arising under an insurance policy; 20  (3) fail to adopt and implement reasonable standards for prompt 21 investigation of claims; 22  (4) refuse to pay a claim without a reasonable investigation of all of 23 the available information and an explanation of the basis for denial of the claim or for 24 an offer of compromise settlement; 25  (5) fail to affirm or deny coverage of claims within a reasonable time 26 of the completion of proof-of-loss statements; 27  (6) fail to attempt in good faith to make prompt and equitable 28 settlement of claims in which liability is reasonably clear; 29  (7) engage in a pattern or practice of compelling [COMPEL] 30 insureds to litigate for recovery of amounts due under insurance policies by offering 31 substantially less than the amounts ultimately recovered in actions brought by those

01 insureds; 02  (8) compel an insured or third-party claimant in a case in which 03 liability is clear to litigate for recovery of an amount due under an insurance 04 policy by offering an amount that does not have an objectively reasonable basis 05 in law and fact and that has not been documented in the insurer's file; 06  (9) attempt to make an unreasonably low settlement by reference to 07 printed advertising matter accompanying or included in an application; 08  (10) [(9)] attempt to settle a claim on the basis of an application that 09 has been altered without the consent of the insured; 10  (11) [(10)] make a claims payment without including a statement of the 11 coverage under which the payment is made; 12  (12) [(11)] make known to an insured or third-party claimant 13 [INSUREDS OR CLAIMANTS] a policy of appealing from an arbitration award 14 [AWARDS] in favor of an insured or third-party claimant [INSUREDS OR 15 CLAIMANTS] for the purpose of compelling the insured or third-party claimant 16 [THEM] to accept a settlement or compromise [SETTLEMENTS OR 17 COMPROMISES] less than the amount awarded in arbitration; 18  (13) [(12)] delay investigation or payment of claims by requiring 19 submission of unnecessary or substantially repetitive claims reports and proof-of-loss 20 forms; 21  (14) [(13)] fail to promptly settle claims under one portion of a policy 22 for the purpose of influencing settlements under other portions of the policy; 23  (15) [(14)] fail to promptly provide a reasonable explanation of the 24 basis in the insurance policy in relation to the facts or applicable law for denial of a 25 claim or for the offer of a compromise settlement; or 26  (16) [(15)] offer a form of settlement or pay a judgment in any manner 27 prohibited by AS 21.89.030. 28 * Sec. 6. AS 21.36.125 is amended by adding a new subsection to read: 29  (b) The provisions of this section do not create or imply a private cause of 30 action for a violation of this section. 31 * Sec. 7. AS 21.36 is amended by adding a new section to read:

01  Sec. 21.36.212. Prohibited denial of claim for causation. An insurer may 02 not deny a claim if a risk, hazard, or contingency insured against is the dominant cause 03 of a loss and the denial occurs because an excluded risk, hazard, or contingency is also 04 in a chain of causes but operates on a secondary basis. 05 * Sec. 8. AS 21.36.320(g) is amended to read: 06  (g) In determining the penalty imposed under (d) and (e) of this section, the 07 director shall consider the amount of loss or harm caused by the violation and the 08 amount of benefit derived by the person by reason of the violation and may consider 09 other factors, including the seriousness of the violation, the promptness and 10 completeness of remedial action, whether the violation was a single act or a trade 11 practice, and deterrence of the violator or others. 12 * Sec. 9. AS 21.36.320 is amended by adding a new subsection to read: 13  (h) If the violation is a single act prohibited under AS 21.36.125 that results 14 in loss or harm, the director may require restitution or issue a cease and desist order 15 but may not impose a penalty that includes a fine or require other remedial action, 16 unless the violation results in loss or harm and is intentional. This subsection does not 17 affect the director's authority to impose a penalty for multiple acts prohibited under 18 AS 21.36.125 or a penalty for an act prohibited under a provision of law other than 19 AS 21.36.125. 20 * Sec. 10. This Act takes effect January 1, 2001.